USD/CHF slips below 0.9200 mark, fresh two-week low amid the global flight to safety

• A combination of factors dragged USD/CHF lower for the second successive day on Thursday.
• Retreating US bond yields, less hawkish FOMC minutes acted as a heading for the greenback.
• Russia-Ukraine jitters benefitted the safe-haven CHF and also contributed to the selling bias.

The USD/CHF pair dropped to a nearly two-week low during the early North American session, with bears looking to extend the downward trajectory further below the 0.92000 round-figure mark.

The pair added to the overnight losses and remained under bearish pressure for the second successive day on Thursday amid the emergence of fresh selling around the US dollar. Against the backdrop of less hawkish FOMC minutes released on Wednesday, retreating US Treasury bond yields turned out to be a key factor that failed to assist the buck to preserve its modest intraday gains.

Fed officials agreed that it would be appropriate to remove policy accommodation at a faster pace than anticipated if inflation does not move down as they expect. The minutes, however, failed to reinforce expectations for a 50 bps rate hike in March. Apart from this, the global flight to safety – amid intensifying Russia-Ukraine conflict – dragged the US bond yields lower.

In the latest geopolitical developments, Russian media reported that the Ukrainian military forces fired mortars and grenades in four Luhansk People's Republic (LPR) localities. Adding to this, the Organization for Security and Co-operation (OSCE) in Europe recorded multiple shelling incidents along the line of contact in the East Ukraine in the early hours of Thursday.

Meanwhile, the Russian Ministry of Defense released a video this Thursday, showing a logistics unit coming back to its home base after the completion of drills. The US Defense Secretary Lloyd Austin, however, dismissed Russia's claims that it is withdrawing troops and said that the US is seeing some Russian forces inching closer to the Ukrainian border.

The contradicting headlines kept investors' on the edge, which was evident from a generally weaker tone around the equity markets. This, in turn, benefitted the Swiss franc's relative safe-haven status and dragged the USD/CHF pair to the 0.9200 mark. A convincing break below will be seen as a fresh trigger for bearish traders and set the stage for further losses.

On the economic data front, the US Weekly Initial Jobless Claims unexpectedly rose to 248K during the week ended February 11 and the previous reading was also revised slightly higher to 225K. Separately, the Philly Fed Manufacturing Index fell more than anticipated to 16 in February, from 23.2 in the previous month, and did little to lend any support to the USD.

Technical levels to watch